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Facebook Above $100 Per Share This Year? One Firm's Bullish Take On The IPO

The social networking company is planning to file for an IPO as soon as Wednesday, the Wall Street Journal reported last week. The offering would be one of the largest tech IPOs ever, with an estimated market capitalization of $75 billion to $100 billion.

While the speculation continues about when the S-1 filing will appear, one broker of secondary Facebook trades, New York-based Felix Investments, is bullish about the Facebook IPO. The firm sees a big jump coming in Facebook’s value after an IPO up to $100 per share–even from the high price (in the mid-$30s) it has been seen trading at in secondary markets recently.

In an email sent out on Saturday Jan. 21 to potential investors–before the news broke about a potential IPO this week–Felix hinted at a coming S-1 filing. The email–reviewed by FORBES, see the text below–said the firm had Facebook stock for sale at $34 per share, which it says translates into a market cap of $74 billion. The email said the company has $2 million remaining of a $10 million chunk of stock. That price in and of itself is not necessarily unusual.

The biggest prediction stated in the email is that the firm expects to sell its Facebook stock at a price “north of $100” in November. Of course, that’s part of the sales pitch. The email also hinted that an S-1 filing for an IPO could hit on (last) Tuesday. It turned out that that didn’t happen, though reports say a filing could happen this week. The email also says the firm expects the IPO will price in May at a price “in the mid $50’s.”

Felix has raised a number of these special purpose vehicles, which are secondary funds that typically invest in just one private company’s stock, according to people familiar with the firm. Felix has created funds for Facebook and Twitter stock, as well as other sought-after private companies. I previously covered Felix’s colorful email for Twitter stock.

Frank Mazzola of Felix declined to talk about specific secondary funds that Felix has not closed, citing SEC regulations. But Mazzola said he’s very positive on Facebook. “We’re very bullish,” Mazzola said. “We’ve invested ourselves. We believe Facebook is going to be a very, very big company. The upside is substantial.”

As far as timing, Mazzola expects Facebook to file for its IPO soon. He believes there’s an incentive for the company to file soon because it wants to provide liquidity for its employees and other shareholders.

What about the criticism that Felix is pumping up the stock a little too much? “I’ve never hid my opinion on Facebook or Twitter,” Mazzola said. “We get paid to have an opinion.”

Here is the main text of the January 21 Felix email:

“We have Facebook stock at $34 which implies a market cap of about $74 billion. They will file on Tuesday “we believe” and price the IPO in May in the mid $50′s and we believe the stock will be north of $100 when we can sell in November. If we are wrong here and are disappointed with the transaction it will be because we only doubled our money – which would be a major disappointment but a highly unlikely one in my opinion! Let me know if you have an interest. We had $10 million and have about $2 million left.

You need to let me know ASAP as because the stock is going very quick – I actually braved the snow and came into the office just to wrap this up.”

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Remember guys when you get advice from Frank Mazzola at Felix, or you are reading research from Felix, that he believes Facebook stock will be “north of $100 by November”. Well, this is August tomorrow, and there is a more chance of it being south of $20. When Mr Mazzola is advising you perhaps it’s to remember that as he said himself, “he’s getting paid to have an opinion.” He may not be getting paid to enhance your wealth.